H. H. Camp Co. v. Pabst Brewing Co.

| Wis. | Sep 25, 1920

Lead Opinion

The following opinion was filed July 3, 1920:

Vinje, J.

Appellant assigns as error (1) the conclusion of the court that it became, presently .rather than conditionally liable for the performance of the terms of the lease in view of the contracts between' the parties; (2) the refusal • to receive parol testimony in determining the object of the parties in executing and receiving its agreement to perform the terms of the lease and in showing the real nature of the transaction; and (3) in refusing to hold it was the .duty of plaintiff to mitigate its damages by evicting Weber &. Stuber in 1917, and reletting the premises at the best rent obtainable.

We do not deem it advisable in this opinion to treat the arguments of counsel as to many phases of the case, because we deem the plain terms of the written agreement of the parties and their conduct under such 'agreement determine the vital question in the case. The trial court concluded that the written agreement of the Pabst Brezving Company, set out in the statement of facts, created a present contract between it and plaintiff enforceable at once in case Weber & Stuber breached any of the terms of the lease, and did not constitute a conditional relation establishing merely privity of estate in case the Pabst Brewing Company should take possession under the lease, as claimed by appellant. We think the circuit court reached the correct conclusion for these reasons: first, the plain import of the language of the agreement is to that effect; second, the relation of the parties under their contracts made such an agreement a reasonable one; third, the parties so construed it; and fourth, the agreement would be meaningless construed as appellant claims it should be.

Very little can advantageously be added by way of argument to the first reason assigned. The language is plain, simple, and direct to the effect that the Pabst Brewing Company will perform all the terms, covenants, conditions, and agreements of the lease to be performed by the lessees. The obligation to perform is specific, is not contingent upon any future condition such as possession, but is absolute in prcesenti and couched in language that includes any breach by the lessees. The Pabst Brezuing Company agreed to see that from the time of the signature of that agreement the terms of the lease would be met by the lessees or itself.

As to the second reason, it is true that plaintiff had already made its lease to Weber & Stuber and in doing so had relied upon their credit. But they were to make substantial improvements, and when the agreement was signed it was apparent that Weber & Stuber could not make such improvements without financial aid from some one. A different situation then presented itself from what obtained when the lease was first made. The Pabst Brezuing Company was interested in the location and in Weber & Stuber, and it was natural that plaintiff should want to get additional security for its lease. This it could and did do by requiring the Pabst Brezuing Company to enter into its written agreements as a condition of its consent to the assignment of the lease. Of course it was not contemplated by any of the three parties at the time the consent was given that it was likely that Weber & Stuber would breach their contract with the Pabst Brewing Company and thus allow or cotnpU it to take possession of the premises. That was a mere contingency that the Pabst Brewing Company wished to guard itself against by securing consent to the assignment of the lease. As a consideration for such consent on plaintiff’s part the Pabst Brezving Company assumed the obligations of the lease, thinking no doubt that it would be, as perhaps it was, reimbursed by the exclusive sale of its domestic draft beer hy Weber & Stuber. In short, plaintiff wished to make -itself more secure, and the Pabst Brewing Company agreed to secure it believing it was for its interest to do so and that in the end it could give such security without cost to itself.

The agreement in question was executed in December, 1914. In March, 1916, the plaintiff wrote the Pabst Brewing Company that the lessees were in default, setting out the provisions of the lease as to the payment of taxes and rents and informing the Pabst Brewing Company that the total amount iri arrears was $1,744.03 and interest, and closed the letter thus-. “Under the circumstances we feel compelled to direct your attention to the situation covering the defaults which have occurred under the terms of the lease, and request that you arrange for an adjustment of the matter at your early convenience.” In reply the Pabst Brewing Company stated that it had had an interview with Weber & Stuber and had agreed to assist them in installing a bookkeeping system that would no doubt materially help them in checking their accounts, and that Weber & Stuber had agreed to make arrangements for the payment of taxes and back rent, and closed by saying: “Please keep us posted on any further developments in the premises, and you can rest assured that all matters will receive our prompt attention.” No analysis of this correspondence is necessary to disclose the fact that plaintiff claimed the Pabst Brezving Company was liable for the defaults and that the Pabst Brewing Company admitted it was. Otherwise why should it wish to be kept posted as to a contract relation between plaintiff and Weber & Stuber in which it was not interested. It was not until a year later, after it Rad consulted counsel, that it denied liability. • ...

.. The agreement, unless construed as.the circuit court construed it, namely, creating an immediate privity of. contract, would be meaningless. If the Pabst Brewing Company .entered. undér the lease a privity of estate would at once exist between it and the landlord, and it would under such privity of. "estate be bound to perform the lease as to rents and taxes accruing under its occupancy. No written agreement to that effect would be necessary. If it be claimed the agreement entered into would compel the Pabst Brewing Company to pay up all arrears in rents and taxes only in case it took.possession under the lease, a sufficient answer is that the agreement does not so provide. It is. not, as before stated, made upon any condition whatever as to the Pabst Brewing ■ Company except that there be a breach by the lessees, Weber & Stuber, in which event the liability of the Pabst Brewing Company is absolute. Many cases have been cited by counsel on both sides bearing upon collateral questions. . We do not deem them of much importance because we base our decision upon the plain language of the agreement, and hold that it creates a present contract relation, specific and unambiguous both upon its face and as applied to the surrounding circumstances; and was so understood by'the parties, as is shown by the correspondence referred to above. Rights and liabilities resulting from the relation of privity of estate do not arise in this case and are therefore not discussed.

Since the contract is clear and unambiguous upon its fáce and as applied to the subject matter, ¡there is no room for construction nor for oral testimony jto show the intent of the parties in entering into it.' Hammond v. Capital City Mut. F. Ins.. Co. 151 Wis. 62" court="Wis." date_filed="1912-10-29" href="https://app.midpage.ai/document/hammond-v-capital-city-mutual-fire-insurance-8190686?utm_source=webapp" opinion_id="8190686">151 Wis. 62, 138 N. W. 92. The trial court’s refusal to receive such testimony / was' therefore proper.

'■ A landlord is under no obligation to mitigate damages by evicting the tenant and reletting the premises. In most jurisdictions it is held that even if the tenant abandons the premises he is under no obligation to re-enter and’ relet; that he can stand upon the terms of the lease and recover-rent for the whole term. 24 Cyc. 1164; 16 Ruling Case Law, 669 and cases cited'. It is not here necessary to- hold more than that the landlord is not required to evict the tenant to mitigate damages in behalf of those liable for the rent. -

By the Court. — Judgment affirmed.

The following opinion'was filed July 7, 1920:

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Dissenting Opinion

Oweñ, J.

(dissenting). The majority opinion construes the language upon which the liability of the Pabst Brewing Company is predicated as ah obligation in the-nature of an original undertaking on its part to pay the rent of Weber & Stuber from the date of the assignment of the. lease. With this construction I cannot agree.

A consideration of the setting in which this agreement is-found, the transaction of which it forms a part, the relation of the parties and their subsequent dealings, conclusively demonstrates to my mind that no such result was intended to' be accomplished. ' - !

In 1915 the plaintiff exécuted to Weber & Stuber a new lease, running for ten years, by the terms'of which the latter agreed to make certain'improvements upon the premises. It transpired tha;t these improvements would be- much-more expensive than was contemplated, and it was necessary for Weber & Stuber to make financial arrangements'iri order to comply with this provision of the lease. They appealed to the Pabst' Brezving Company. That company-agreed to advance to them in the neighborhood of $20,000'.-This sum was to be repaid in the nature of an excess charge on each barrel of beer supplied to Weber & Stuber by the Pabst Brewing Company. As a matter of security Weber & Stuber executed to the Pabst Brewing Company an assignment of the lease executed to them by the plaintiff, providing that upon default the Pabst Brezving Company might take possession of the premises. It was not an assignment in prcesenti. It was a conditional assignment merely, for the purposes of security, and so long as Weber & Stuber performed their contract with the Pabst Brezving■ Company that company acquired no right to the possession of the premises under the assignment. It was provided in and by the terms of the original lease that it should not be assigned without the consent of the lessor. The written assignment showed plainly upon its face that it was executed by Weber & Stuber to the Pabst Brewing Company for the purposes of security merely, and that unless a breach occurred on the part of Weber & Stuber the right of possession on the part of the Pabst Brezving Company would never arise. This assignment executed by Weber & Stuber was taken to the plaintiff with a request that it consent thereto. As a condition to its consent the plaintiff required the Pabst Brezving Company to sign an agreement at the foot of Weber & Stuber’s signature, in the following language: “The said Pabst Brezving Company hereby agrees to perform all- the terms, covenants, conditions, and agreements of said lease to be performed by the said lessees therein.” Thereupon it appended its written consent to the assignment of the lease at the foot of such agreement.

The question is, What was the nature of the obligation assumed by the Pabst Brewing Company under said agreement? The lower court, and the majority opinion here, holds that the Pabst Brezving Company obligated itself to pay all rent arising under the terms of the lease from that date. That such was the intention of the parties is rendered doubtful by the fact that Weber & Stuber continued in the possession of the premises and continued to be liable to the plaintiff under the terms of the original lease signed by them. Plainly it was not the intention of the parties to substitute the Pabst Brewing Company for Weber & Stuber as the primary obligors upon the lease. They not only continued in possession, but the plaintiff continued to look to them for the payment of the rent. If the construction of the court be correct, we have the very novel and extraordinary circumstance of two parties being primarily liable in the absence of any joint, or joint and several, undertaking. It is not intended to intimate that such a circumstance could not arise, but the very extraordinary character of the situation is in and of itself a strong circumstance to negative such an intent on the part of the parties.

The majority opinion suggests that while the plaintiff relied upon the financial responsibility of Weber & Stuber in making the lease, the fact that they found it necessary to make financial arrangements in order to raise the money for the improvements might have shaken the confidence of the plaintiff in their'financial responsibility, and when presented with the written assignment of the lease it seized the opportunity to obtain security for the payment of the rent. If this were the intention of the parties, it is submitted that the language employed was poorly adapted for the accomplishment of such purpose and not such language as is ordinarily used under such circumstances. If it were the intention of the parties that Weber & Stuber should continue in the possession of the premises, retain their contractual obligations with the plaintiff, and it should look to them primarily for the payment of the rent, resorting to the Pabst Brezving Company therefor only upon default of Weber & Stuber, then the intention of the parties was that the Pabst Brezving Company should become guarantor of the rent, and this agreement, ordinarily, would have been expressed in the usual and ordinary terms of a guaranty, and the liability of the Pabst Brezving Company would be but secondary, so to speak. It is conceded, however, on the part of every one that the liability of the Pabst Brezving Company is primary and not secondary. The fact that the agreement was not in the form of a guaranty; to my mind conclusively negatives the idea-that it was the intention of the parties, or any of them, that the Pabst Brewing.Company should become ■liable for Wéber & Stuber’s rent, or that it assumed any liability whatever under the terms of the lease' so long as Weber & Stuber remained in the possession of the premises.

But the question persists, What was the purpose of the agreement?. It is- submitted that the agreement is one which ordinary care and prudence would prompt the plaint- ' iff -to demand if the assignment were to take immediate effect, for the reason that it is well settled that the assignee of a lease assumes only such, liabilities and responsibilities as .arise from the privity of estate growing out of possession. 24 Cyc. 982; Bell v. American Protective League, 163 Mass. 558" court="Mass." date_filed="1895-05-28" href="https://app.midpage.ai/document/bell-v-american-protective-league-6425290?utm_source=webapp" opinion_id="6425290">163 Mass. 558, 40 N. E. 857; Consolidated Coal Co. v. Peers, 166 Ill. 361" court="Ill." date_filed="1896-11-11" href="https://app.midpage.ai/document/consolidated-coal-co-v-peers-6967264?utm_source=webapp" opinion_id="6967264">166 Ill. 361, 46 N. E. 1105; Durand v. Curtis, 57 N.Y. 7" court="NY" date_filed="1874-01-05" href="https://app.midpage.ai/document/durand-v--curtis-3578444?utm_source=webapp" opinion_id="3578444">57 N. Y. 7, 11; Consumers’ Ice Co. v. William H. H. Bixler & Co. 84 Md. 437" court="Md." date_filed="1896-12-03" href="https://app.midpage.ai/document/consumers-ice-co-v-william-h-h-bixler--co-7899824?utm_source=webapp" opinion_id="7899824">84 Md. 437, 35 Atl. 1086; Washington N. G. Co. v. Johnson, 123 Pa. St. 576, 16 A. 799" court="Pa." date_filed="1889-02-18" href="https://app.midpage.ai/document/washington-n-gas-co-v-johnson-6239146?utm_source=webapp" opinion_id="6239146">16 Atl. 799; Peck v. Christman, 94 Ill. App. 435" court="Ill. App. Ct." date_filed="1901-04-08" href="https://app.midpage.ai/document/peck-v-christman-7001934?utm_source=webapp" opinion_id="7001934">94 Ill. App. 435; Kribbs v. Alford, 120 N.Y. 519" court="NY" date_filed="1890-06-03" href="https://app.midpage.ai/document/kribbs-v--alford-3605317?utm_source=webapp" opinion_id="3605317">120 N. Y. 519, 24 N. E. 811; Dolph v. White, 12 N.Y. 296" court="NY" date_filed="1855-03-05" href="https://app.midpage.ai/document/dolph-v--white-3612157?utm_source=webapp" opinion_id="3612157">12 N. Y. 296. For instance, the as-signee of a lease whose liability is that arising from a mere privity of estate may assign the lease to a beggar and thereby escape further liability for the payment of rent. There are numerou’s covenants in the lease from the Camp Company to Weber & Stuber which are clearly personal covenants and do not run with 'the land. For example,' the covenant prohibiting gambling on the premises or their use for other illicit or illegal purposes, or for purposes which would make the premises extrahazardous in the opinion of the superintendent of the Milwaukee board of fire underwriters ; the covenants in regard to .cleaning streets, alleys, and sidewalks in front of and around the premises, and to obey any and all lawful orders, rules, and regulations of any state or municipal officers, boards, or commissions having authority in the premises affecting the demised property; that no unsightly signs and no. advertising matter shall be placed by them (the lessees) on the outside, of the demised premises, as well as the covenant that the lessees will •not sublet said premises or assign the lease for any purposes .whatsoever without the consent of the lessor in writing. These are all personal covenants. None of them run .with the land, and in order to create a;duty on the part of the as-signee of the lease to comply with these terms therein, just such a provisiop as was signed by the Brezving Company was necessary. As above stated, it is just such a provision as care and prudence would require if the assignment of the lease were to take effect immediately, to .the end .that the assignee of the lease would be bound by each and every provision thereof.

Is there- any reason to believe that the parties had any other or different purpose in mind simply because the assignment was given by Weber & Stuber to the .Brezving Company as security for the performance of a collateral contract and the resulting fact that the Brezving Company might :never come into possession of the premises? I am frank to say that I can see no reason for such a conclusion, when we concede, as it seems to me must .be conceded,, that the .agreement upon which the liability of the Brezving Company is predicated is a natural and prudent condition to the consent of the assignment of the lease under any form. To my mind the conclusion is inevitable that the liability assumed by the Brezving Company was one to arise when and only when it came into possession of the demised premises under and by virtue of the assignment of the lease, and ' that until then there was no liability on the part of the Brezving Company whatever. • The subsequent dealings of .the parties are consistent with this view. The Camp Company continued to collect rent from Weber & Stuber and said nothing to the Brezving Company with reference thereto, except upon one occasion, when Weber & Stuber were in default for the payment of taxes for thirty days and'were in arrears for two months’ rent. The Camp Company then (March 2, 1916) wrote to the Brewing Company calling its attention to the arrearages. While it may be inferred from the letter of the Camp Company that it looked to the Brezv-ing Company for the payment of these arrearages by virtue •of the agreement under consideration, the Brewing Company certainly did nothing that can be construed as assenting to such view. On March 11th the Brezving Company replied to the letter, saying they had had an interview with Weber .& Stuber and had agreed to assist them in installing a bookkeeping system and that Weber & Stuber had agreed to make arrangements for the payment of the taxes and back rent and trusted that the Camp Company would be able to make a satisfactory adjustment with them. There is nothing in this letter which acknowledges responsibility on the part of the Brezving Company for the rent or taxes then due. The interest of the Pabst Brewing Company in the ■matter is not at all surprising. It was interested in Weber & Stuber to the amount of $20,000 and was interested in their continuance as a going concern. It was but natural that it should exercise its good offices in urging Weber & Stuber to continue .the lease. Its conduct at that time amounted to nothing more than that of a friendly, though perhaps interested, mediator, and fell far short of a recognition of its liability under the terms of the agreement.

If it had been the purpose of the parties to impose an immediate liability upon the Brewing Company, such liability could have been made to appear in much less equivocal language. The agreement was phrased by an able practitioner in this court, from whom we do not expect such ambiguity of expression as will conceal its real purpose from all but a bare majority of the members of this court. I submit that the language in the setting in which it is found, inserted under the* circumstances as they existed, was appropriate to impose upon the Brewing Company the liability herein ascribed to it, but that it is extraordinary and inappropriate language to create the liability imposed by the majority opinion.

I j*m authorized to state that Mr. Justice Siebecker and Mr. Justice Esci-iweiler concur in the foregoing dissenting opinion.

. A motion for a rehearing was denied, with $25 costs, on September 25, 1920.